§4972 — Tax on nondeductible contributions to qualified employer plans
8 cases·2 followed·6 cited—25% support
Statute Text — 26 U.S.C. §4972
In the case of any qualified employer plan, there is hereby imposed a tax equal to 10 percent of the nondeductible contributions under the plan (determined as of the close of the taxable year of the employer).
The tax imposed by this section shall be paid by the employer making the contributions.
For purposes of this section—
The term “nondeductible contributions” means, with respect to any qualified employer plan, the sum of—
the excess (if any) of—
the amount contributed for the taxable year by the employer to or under such plan, over
the amount allowable as a deduction under section 404 for such contributions (determined without regard to subsection (e) thereof), and
the amount determined under this subsection for the preceding taxable year reduced by the sum of—
the portion of the amount so determined returned to the employer during the taxable year, and
the portion of the amount so determined deductible under section 404 for the taxable year (determined without regard to subsection (e) thereof).
For purposes of paragraph (1), the amount allowable as a deduction under section 404 for any taxable year shall be treated as—
first from carryforwards to such taxable year from preceding taxable years (in order of time), and
then from contributions made during such taxable year.
In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account any contribution for such taxable year which is distributed to the employer in a distribution described in section 4980(c)(2)(B)(ii) if such distribution is made on or before the last day on which a contribution may be made for such taxable year under section 404(a)(6).
For purposes of paragraph (1), if—
the amount which is required to be contributed to a plan under section 412 on behalf of an individual who is an employee (within the meaning of section 401(c)(1)), exceeds
the earned income (within the meaning of section 404(a)(8)) of such individual derived from the trade or business with respect to which such plan is established,
such excess shall be treated as an amount allowable as a deduction under section 404.
The term “nondeductible contribution” shall not include any contribution made for a taxable year beginning before January 1, 1987.
In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account—
so much of the contributions to 1 or more defined contribution plans which are not deductible when contributed solely because of section 404(a)(7) as does not exceed the amount of contributions described in section 401(m)(4)(A), or
so much of the contributions to a simple retirement account (within the meaning of section 408(p)), a simple plan (within the meaning of section 401(k)(11)), or a simplified employee pension (within the meaning of section 408(k)) which are not deductible when contributed solely because such contributions are not made in connection with a trade or business of the employer.
For purposes of subparagraph (A), the deductible limits under section 404(a)(7) shall first be applied to amounts contributed to a defined benefit plan and then to amounts described in subparagraph (A). Subparagraph (B) shall not apply to contributions made on behalf of the employer or a member of the employer’s family (as defined in section 447(e)(1)).
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1 See References in Text note below.
In determining the amount of nondeductible contributions for any taxable year, an employer may elect for such year not to take into account any contributions to a defined benefit plan except, in the case of a multiemployer plan, to the extent that such contributions exceed the full-funding limitation (as defined in section 431(c)(6)). For purposes of this paragraph, the deductible limits under section 404(a)(7) shall first be applied to amounts contributed to defined contribution plans and then to amounts described in this paragraph. If an employer makes an election under this paragraph for a taxable year, paragraph (6) shall not apply to such employer for such taxable year.
For purposes of this section—
The term “qualified employer plan” means—
any plan meeting the requirements of section 401(a) which includes a trust exempt from tax under section 501(a),
an annuity plan described in section 403(a),
any simplified employee pension (within the meaning of section 408(k)), and
any simple retirement account (within the meaning of section 408(p)).
The term “qualified employer plan” does not include a plan described in subparagraph (A) or (B) of section 4980(c)(1).
In the case of a plan which provides contributions or benefits for employees some or all of whom are self-employed individuals within the meaning of section 401(c)(1), the term “employer” means the person treated as the employer under section 401(c)(4).
8 Citing Cases
We hold that petitioner is so liable and did not have reasonable cause for not filing Forms 5330 or not paying excise taxes for the years at issue; (4) whether the statute oflimitations bars the assessment and collection ofexcise taxes pursuant to section 4972 for nondeductible contributions to the plan for calendar years 2002 through 2006.
y and clearly imposes liability for the Federal income tax on the average American worker." Petitioner cites numerous example ofspecific text such as: section 4401, which levies a tax on each person who is engaged in the business ofaccepting wagers; section 4972, tax on contributions to qualified employer pension plans imposing a tax on "the employer making the contributions"; and section 5703, excise tax on manufactured tobacco products stating that manufacturers and importers oftobacco product
80-10; and Robert A. Fletcher and Pearl Fletcher, docket No. 1481-10. On December 15, 2011, we granted motions to change the captions in docket Nos. 1448-10 and 1480-10. SERVED Jan 14 2013 - 2 - [*2] Held, further, the corporation is liable for the I.R.C. sec. 4972 excise tax to the extent determined herein. It is not liable for the I.R.C. sec. 6651(a)(1) and (2) additions to tax. Ps are liable for a portion of the I.R.C. sec. 6662(a) penalties as redetermined in this opinion. Matthew Taggart, R
Also, for 1988, 1989, and 1990, respondent determined that petitioner was liable for excise taxes under section 4972 with regard to the portion of petitioner’s contributions to the plans that, in respondent's view, constituted excess contributions.